The lifting of a 25-year federal moratorium on oil and gas drilling in an 8.3 million acre area of the Outer Continental Shelf in the Gulf of Mexico 125 miles south of the Florida Panhandle should help provide short-term natural gas cost relief to plastic manufacturers when drilling ramps up four years from now.
The industry uses natural gas for operations and as a building block for the chemicals used to make plastic resins.
The measure, passed by the lame-duck Congress Dec. 9 as part of a bill that extends a variety of tax credits, has been sought by business for two years, as the area is believed to have 1.3 million barrels of oil and 6 trillion cubic feet of natural gas.
Originally, the industry had hoped for a more extensive measure. ``But the political realities were that a limited bill was all that could be done,'' said Chris Brown, senior director of federal government affairs with the Society of the Plastics Industries Inc. in Washington.
Industry also had hoped to build on any measure that passed in this Congress in succeeding years. But, with the shift in power to the Democrats starting next January, that is unlikely. Nick Rahall II, D-W.Va. - who will be chairman of the Resources Committee of the House starting in January - has stated that this offshore drilling bill will be the last of its kind for some time to come.
Not all 8.3 million acres in the specified area, Lease 181, will be opened for drilling immediately. The law directs the Interior Dept. to award leases for drilling 2.5 million acres no later than one year from enactment and the other 5.8 million acres as soon as practical.
Under the bill, the money the federal government gets from oil drilling leases will drop in half, as the new formula gives 12.5 percent of the lease money to the Land and Water Conservation Fund of the National Park Service, which provides matching grants to states and local governments for the acquisition and development of public outdoor recreation areas and facilities and 37.5 million to Texas, Louisiana, Mississippi and Alabama. The Congressional Budget Office has estimated that the four states would receive an average of $51 million annually from 2009 to 2016, but both Texas and Louisiana estimated their annual cut to be more than $100 million annually.
The no-drilling buffer zone of 125 miles from the Florida Panhandle and 235 miles from Tampa stays in effect until 2022.